How can the world combat the $2.2 trillion global counterfeit market?

An image to illustrate the concept of the anticounterfeiting process.

Uzi Breier, CEO of Dotz, explains ValiDotz security markers, analysing how the technology makes it economical for brands to adopt a cutting-edge anti-counterfeiting process.

The counterfeiting pandemic is a reality for all of us as consumers, as well as for manufacturers of high-value products and brands, with the global forgery market now estimated at US $2.2 trillion (~€1.9 trillion) – the equivalent of about 15 percent GDP.
As a result, declining trust is a major reputational issue of our time. Most companies that produce any sort of product with a premium brand are under attack from counterfeiters, which is undermining the value customers place in their brands. Counterfeiting is prevalent in everything from leading clothing and consumer goods brands to car parts and alarmingly, even safety equipment.

When considering safety, one would like to assume building contractors always use the highest-quality materials, petrol stations always sell purified fuel that hasn’t been diluted with inferior substitutes, and commercial airplanes, ships and cars all utilise approved safety equipment. An example of this is child safety car seats. This basic safety device from high-quality and reputable brands is among the many plastic items currently being targeted by counterfeiters. Parents purchasing a discounted child car seat from an online retailer could be unwittingly buying a counterfeit product and putting their child’s life at risk.

Counterfeit car seats are often difficult to identify, as they imitate the original car seat’s external appearance, brand logo and safety tags. However, while the original car seat is made with durable plastic which complies with rigorous safety standards and has withstood crash-testing scenarios, a counterfeit does not offer the same protections and could have potentially deadly consequences in the event of a crash. Seized counterfeit child car seats around the world have literally fallen apart on impact during crash-testing.

Modern counterfeiting concerns

More recently, counterfeiting has spread from common consumer items into industrial applications including polymers and bulk liquids, such as lubricants. Many of these counterfeit products also pose serious health and safety concerns for users.

A noticeable illustration for this is within the industrial lubricants and bulk liquid industries, which are increasingly being counterfeited in mass quantities, posing a serious economic threat to an otherwise rapidly growing market. Counterfeited and out of spec lube oil – used in all aspects of modern life from vehicles and industrial machines to hydraulic systems and bearings – can not only result in having your car stop in the middle of the highway, but also cause costly machine failures and prolonged down times for critical equipment which pose severe risks to both humans and the environment.

How can we solve these issues?

Currently, there are very limited means for brands to successfully combat these counterfeit products as perpetrators manufacture low-quality fake oils, use empty containers of the original product and even high-quality printing and packaging to mislead consumers.
For manufacturers and sellers of bulk liquids, if a defective counterfeit product causes injury, or malfunctions, the consequences can be much worse than just lost revenue. Legal liability for a defective product can fall on any party in the chain of distribution, and can result in millions of dollars in expenses, legal fees and damages.

I recently came across a common product liability instance within the wind-turbine industry, where manufacturers provide customers with a multi-year guarantee. Wind-turbines require high-end specialty lubricant for optimal operation and efficiency, and are essential to maximising the machine’s life expectancy. Diluted or counterfeit lubricant can cause the turbine to prematurely malfunction, resulting in the manufacturer being sued for product liability.

Defending product liability claims relies on the manufacturer providing evidence that the lubricant used is a counterfeit. This often involves the manufacturer using experts to compare its product to the fake, establishing that the materials and composition are different. Until now this has often been difficult to do, as many manufacturers are reluctant to divulge proprietary formulas and often settle out of court for millions of dollars.
While the rate of counterfeiting continues to grow and undermine consumer trust, manufacturers need to take proactive measures to protect their brand reputation.

ValiDotz security markers

Australia-listed tech company Dotz Limited (ASX:DTZ) is at the forefront of brand protection, helping companies in these industries tackle counterfeiting with its proprietary and unique end-to-end marking, tracing and verification technology.

The company has developed a new generation of security markers, using unique non-toxic materials with fluorescent properties. Its ValiDotz™ security markers utilise molecular, carbon-based tagging materials to create infinite unique spectral signatures. These markers can be inserted directly into plastics and other polymers, lubricants, fuels and other liquids, enabling manufacturers to discreetly mark packaging but also penetrate into the actual products without affecting the properties or appearance of the tagged product, hence making the solution reverse-engineering proof. ValiDotz are invisible to the naked eye and can be safely embedded in packaging, safety equipment such as child car seats, printed surfaces as well as inserted into high-end lubricants and greases.

Featuring multiple layers of security, ValiDotz cannot be identified nor replicated and can be instantly detected in the field using the company’s line of sophisticated InSpec™ detectors, allowing on-site authentication throughout the supply chain.

For lubricant manufacturers, ValiDotz acts as an insurance policy against product liability claims, allowing them to unequivocally prove in court that the product is a counterfeit without disclosing proprietary formulas. Dotz’s security markers can also detect dilution or if the product has been mixed with low-rate materials, thereby removing manufacturers from the chain of distribution.

Adopting a cutting-edge anti-counterfeiting process

For consumers of child car seats, ValiDotz can provide comfort to parents that their child is well protected by an authentic unit. Easily incorporated into existing manufacturing processes in packaging, plastics, polymers and bulk liquids, Dotz’s technology makes it economical for brands to adopt cutting-edge anti-counterfeiting process and change the life of consumers and the business outlook of leading brands.

Uzi Breier
Dotz Ltd.

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